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And, yes, I DO take it personally: Pay no attention to 60 Minutes... Carl Ichan is NOT a capitalist hero...
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Monday, March 10, 2008

Pay no attention to 60 Minutes... Carl Ichan is NOT a capitalist hero...

Carl Icahn

yesterday on 60 minutes...
Intimidating, relentless and rich. That, in a nutshell, is Carl Icahn. His investment strategy is simple: find a company he thinks is poorly run and then start buying up shares of its stock. Then, start agitating until changes are made. Along the way, the companies he chooses generally start improving, improving his bottom line over and over.

there's nothing that makes me want to puke faster than watching our worthless news media lionize a super-rich, arrogant, sociopathic, greedy, capitalist son-of-a-bitch like carl icahn... that business about "the companies he chooses generally start improving" is pure horseshit... if they do, it's only incidental to his primary goal which is lining his own pockets... here's what he did to twa...
Under Icahn's direction, many of [TWA's] most profitable assets were sold to competitors, much to the detriment of TWA. Icahn also moved the company's headquarters from New York City to his hometown, Mt. Kisco, New York. Icahn was eventually ousted in 1993, though not before the airline was forced to file for bankruptcy in 1992. Icahn emerged unscathed. TWA moved its headquarters from Mt. Kisco to the former headquarters building of McDonnell Douglas in St. Louis soon after Icahn left.

When Carl Icahn left in 1993, he arranged to have TWA give Karabu Corp., an entity he controlled, the rights to buy TWA tickets at 45 percent off published fares through September 2003. This was named "The Karabu Deal". The ticket program agreement, which began on June 14, 1995, excluded tickets for travel which originated or terminated in [TWA's hub airport] St. Louis, Missouri. Tickets were subject to TWA's normal seat assignment and boarding pass rules and regulations, were non-assignable to any other carrier, and were non-endorsable. No commissions were paid to Karabu by TWA for tickets sold under the ticket program agreement.

By agreement dated August 14, 1995, LLC, a Karabu wholly owned operating subsidiary, was joined as a party to the ticket program agreement. Pursuant to the ticket program agreement, LLC could purchase an unlimited number of system tickets. System tickets are tickets for all applicable classes of service which were purchased by Karabu from TWA at a 45 percent discount from TWA's published fare. In addition to system tickets, LLC could also purchase domestic consolidator tickets, which are tickets issued at bulk fare rates and were limited to specified origin/destination city markets and did not permit the holder to modify or refund a purchased ticket. Karabu's purchase of domestic consolidator tickets was subject to a cap of $70 million per year based on the full retail price of the tickets.

Hence, on most TWA flights, Karabu could buy and then sell a sizable portion of the available seats, leaving TWA to pay for its operating cost with the revenue accrued through the sale of any remaining ticket sales. In other words, TWA was flying passengers who were not paying them, but someone else. This deal left the company powerless. If TWA wanted to increase revenue on busy routes by putting a large plane into service, Karabu could only claim more seats. It is estimated TWA was losing around $150 million a year in revenue with this deal.

In trying to ameliorate the Karabu deal, TWA went in and out of bankruptcy in 1995.

lovely, eh...?

in 1999, i had an opportunity to see first-hand what icahn had done to twa when i was the general manager of an airport operation for united airlines... twa had decided to fly into the airport where i was stationed and we won the contract to ground handle their one daily flight... i got to know a few twa people and heard their icahn horror stories... much more damning, however, was to see the condition of their airplanes...

since their aircraft stayed with us overnight, that meant we had to move it off the gate to a remote pad, bring it back in the morning, and clean the interior before loading the passengers up for the morning flight out... i remember riding in the cockpit one evening as the aircraft was being towed to the remote pad... it was raining and i noticed a small puddle of water had collected between the rubber seal and the reinforced glass of the window on the pilot's side of the cockpit... i also noticed that a few food service napkins had been stuffed in there previously to try to soak it up, and it was obvious that it had been a problem for some time... on top of that, the smell from the lavatories was horrible... airplane lavatories are supposed to be thoroughly scrubbed and disinfected once a month, in addition to being emptied, flushed and cleaned daily... twa was obviously skimping on even the most minor maintenance... very sad, really, and all thanks to carl icahn...

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